A generous $600 million of government money is being ploughed into a new fund to help local businesses move into overseas markets via acquisitions.
The International Partnership Fund will be managed by Temasek Holdings' private equity unit Heliconia Capital Management.
The fund will support firms that intend to grow by acquiring their regional peers, but which may not be large enough to swallow a whole acquisition alone. It will hold the opportunity window open for smaller local firms by letting them link up with Heliconia as a consortium partner that is able to co-invest in the target company alongside the Singapore acquirer.
By coming in purely as a financial investor, Heliconia will not compete over ownership. Firms that have not identified an acquisition target can also get Heliconia's help to source deals by tapping its deep networks, which only large private equity funds can maintain.
Help for firms to expand overseas
Logistics firm Keyfields chief executive Kenny Tan welcomed the initiative: "We have acquired three companies in the past 13 years, and I am in Yangon now to meet a company that will be our sales and marketing arm." Acquisitions are faster than growing organically, he said.
To draw on the fund, firms must be Singapore-based with their headquarters here and annual revenues of no more than $800 million.
The creation of the fund is part of an effort to develop a "smart financing ecosystem" here, said Finance Minister Heng Swee Keat.
More funding support is also being targeted at infrastructure developers to help them undertake more overseas projects, said Mr Heng.
In particular, trade agency IE Singapore will enhance its Internationalisation Finance Scheme, which helps firms secure bank loans for overseas investments through government risk-sharing.
The changes are to bridge gaps in financial markets for project finance in the region, to the benefit of all local infrastructure players.